Student bank accounts: forget the gimmicks and focus on the free overdraft

Those hoping to start university this autumn should swot up on their banking
options ahead of Freshers' Week. As the table shows, there is a significant
difference between what's on offer from the main providers.

Most students will opt for an account with one of the "big four": Barclays, HSBC, Lloyds TSB (which now also owns Halifax and Bank of Scotland) and NatWest/RBS.

These banks tend to have more branches on university campuses, which can be useful for students needing to cash cheques, extend overdraft facilities or just talk to an adviser specialising in student finances.

Banks offer extremely attractive terms to students; but try not to be swayed by various goodies and gimmicks, be it free music downloads or a cheap railcard. Instead, focus on the central feature of a student bank account: the free overdraft.

Bank of Scotland and Halifax offer up to £3,000 from year one; most other banks increase the amount available each year, with Barclays offering up to £2,000 by year three, and HSBC and NatWest offering less at £1,500.

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It's also worth checking what charges you face for exceeding these limits.

While Santander will charge interest at 28.7pc for unauthorised borrowing (more than most credit cards), Lloyds charges a more reasonable 8.2pc, while HSBC charges 3pc over the Bank Rate, giving a current rate of just 3.5pc.